Are you afraid of big data?

(MoneyWatch) Big data is all the rage. Enough information on consumers -- from their online and cell phone usage and the sociographic information that credit cards and direct mail companies collect -- and we should be able to predict all kinds of behaviour: Purchasing needs, health problems, changes in your social status. One of the most spectacular examples of big data usage occurred last year when Target predicted that one of its 16 year old customers was pregnant and bombarded her with coupons for baby clothes. Furious, her father confronted the company, only to discover that the big data marketers knew his daughter better than he did.

That was, of course, an example of getting the data right and the marketing decision wrong. But many consumers (and government organizations) are just as fearful of following the data to the wrong conclusion: Just because I research guns for sale doesn't mean I'm planning to kill someone.

But amidst all the controversy and legislative head scratching, one argument bears consideration. In his book, Who Owns the Future, Jaron Lanier argues that the companies which make huge profits from our data are those offering the "free" services we've all come to depend on: Google, Microsoft, anyone providing your phone apps. The might of these corporations will lie not just in their financial muscle but in the concentration of data that they own. Why, Lanier asks, are we willing to give them our data for free -- so that they become yet more powerful while the technology they build leaves more and more of us unemployed?

His answer to this very real problem is that we should all be reimbursed for the value of the data we provide. We can't, he says, stop them getting the information -- not least because we mostly don't want to pay for services we now get for free. But we ought to get a share of their profits. This would, Lanier argues, make the relationship between the customer and the service provider more equitable. It would address some of the profound inequalities which we are already seeing and which threaten to become greater still. He even argues that, long term, this will benefit the companies as well as consumers.

Personally I worry when all aspects of our social lives turn into transactions. But perhaps that is a sentimental concern. Lanier's book has persuaded me that there is a real problem here and, while I'm not wholly convinced by his solution, I am persuaded that we need one. While it's obvious that the banking crises have unearthed market failure, the same must be said for the increasing dominance of Google, Apple and a few data houses. The concentration of data in a few hands is just as risky as the concentration of finance in a few banks. It would be nice, for once, if we didn't need a crisis to make us do something about it.

Margaret Heffernan has been CEO of five businesses in the United States and United Kingdom. A speaker and writer, her most recent book Willful Blindness was shortlisted for the Financial Times Best Business Book 2011. Visit her on www.MHeffernan.com.